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Safety nets for poor seen raising buying power by up to 50%

EXPANDING SOCIAL protection programs such as universal child benefits, disability benefits and old-age pensions for the poor in the Philippines could boost their purchasing power by up to 50%, a United Nations (UN) agency said.

In a report issued Tuesday, the UN Economic and Social Commission for Asia and the Pacific (ESCAP) said the pandemic has exposed gaps in social protections across Asia and the Pacific, pointing to the need for governments to expand their coverage to lift more families out of poverty.

“Simulations for 13 developing countries in the Asia-Pacific region show that if governments offered universal child benefits, disability benefits and old-age pensions, at conservative benefit

levels, more than one-third of people would be lifted out of poverty,” according to the report, “Beyond the Pandemic.”

Applying such measures to the poorest households in the Philippines could increase their purchasing power by 50%, ESCAP said, an effect also observed in Indonesia, the Maldives, and Sri Lanka.

However, the report noted that expanding social protections means governments need to boost their investment in such measures to as much as 6% of gross domestic product (GDP).

“Almost all countries in the region can afford this, especially when they consider the cost of doing nothing,” ESCAP said.

It estimated that many governments’ budgets for social protection are currently at just 2% of GDP. The Asia Pacific average was 5%, much less than the global average of 11%.

In the Philippines, one of the government’s flagship social protection programs is the Pantawid Pamilyang Pilipino Program (4Ps), which consists of targeted payments to low-income households, on the condition that they keep their children in school and attend regular medical check-ups. Funds allocated for the program hit P106 billion this year.

Last year, the government also launched a P200-billion social amelioration program which provided two-months’ worth of cash aid to families hit hard by the lockdown.

Aside from expanding social protections, ESCAP Executive Secretary Armida Salsiah Alisjahbana said Tuesday that countries should also invest in their recovery, keep trade and information flowing, and address environmental issues.

Investment for a sustainable recovery will see governments rolling out programs aligned with Sustainable Development Goals (SDGs), with a focus on health, education and infrastructure. ESCAP estimated the region needs additional investment of $1.5 trillion per year in the relevant sectors to achieve the 17 SDGs by 2030.

“If they are to offer large fiscal support while ensuring fiscal and debt sustainability, countries may need to go beyond traditional prudence and utilize unconventional fiscal tools,” it said.

To create more fiscal space, ESCAP said governments can curb non-developmental expenditures like military budgets, while introducing carbon taxes to raise more revenue while aiding climate change mitigation. Adopting “more equitable forms of taxation” such as focusing on income taxes where the wealthy pay more, rather than increasing indirect taxes, such as those imposed on goods in which rates are the same across all income sectors.

“The richest citizens can also contribute more through taxes on wealth and property. Such taxes are largely missing in the region, so inequality is passed from one generation to the next,” it said.

Keeping global trade and supply chains flowing is also crucial in attaining recovery, because it will ensure that vulnerable communities maintain their access to goods. — Beatrice M. Laforga

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